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Target Keeps Upgrading to Cope With Changing Retail Dynamics

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Retail is no more restricted to brick-&-mortar and the scenario has changed drastically with the advancement of technology and digital transformation, which have altered consumer shopping patterns. With consumers now seeking more convenience, personalization and speed; retailers are coming up with ground-breaking ideas to build a loyal customer base. Target Corporation (TGT - Free Report) has taken steps to cater to this shift in preference and has yielded positive results from the same.

The company’s initiatives such as the development of omni-channel capacities, diversification and localization of assortments, and emphasis on flexible format stores to generate higher sales productivity bode well.

From quite some time, Target has been investing in groceries in the wake of rising competition from retailers such as Amazon (AMZN - Free Report) , Kroger (KR - Free Report) and Walmart (WMT - Free Report) . The company launched a new food brand, Good & Gather. Prior to this, the company has launched private-label brands namely Everspring, Auden, Colsie and Cloud Island Essentials.

Moreover, it has added same-day delivery options and undertaken steps to augment supply chain. It is deploying resources for technology and process improvements. Further, its new loyalty program — Target Circle — is aimed at providing customers with more convenient and customized shopping experience.

Other notable endeavors include Target Restock program that enables customers to restock their shipping box with essential items online and get them delivered at their doorstep by the next business day for a nominal charge. Drive Up, an app-based service, is another initiative to expedite the shopping process. The service enables customers to place orders using the Target app and have them delivered to their cars. The company offers the service across more than 1,250 stores.

Further, in order to improve supply chain and expand delivery capabilities, the company acquired Grand Junction. Earlier, Target had teamed up with popular online grocery delivery service, Instacart, to capture the booming online grocery delivery market. The company made significant headway in the same-day delivery race by acquiring Internet-based grocery delivery service, Shipt, to provide same-day delivery of groceries, essentials, home, electronics, toys and other products. Shipt operates in more than 1,500 outlets in more than 200 markets.

Such efforts help result in robust traffic, favorable store comps and surge in comparable digital sales. We note that comparable sales rose 3.4% during the second quarter of fiscal 2019, marking the ninth successive increase. Comparable digital channel sales surged 34% and added 1.8 percentage points to comparable sales.

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